Texas New Energy Taxes

A recent study estimated that proposed federal legislation aimed at decreasing greenhouse gas emissions would increase Texans electricity bills by a minimum of $10 billion.

Meanwhile, the Obama administration announced new fuel standards that could cost American car buyers $19 billion a year when fully implemented.

Not content with these new energy taxes on Texas consumers, the Texas Legislature is busy adding more.

One source for these higher costs is a mandate to increase generation of electricity from renewable energy sources, such as those contained in Senate bills 541 and 545.

Over the last few years, the legislature has mandated renewable energy generation at a cost to Texans of $20 billion through 2025. The beneficiaries of this mandate will largely be wind energy producers.

Now non-wind producers are trying to get their share of the pie. SB 541 would mandate either 1,500 or 3,000 megawatts (MW) of renewable energy generation from non-wind sources, such as biomass, solar, and geothermal. SB 545 creates a distributed solar generation program, which requires retail electric providers to purchase electricity generated by small- and utility-scale solar generation.

While wind energy is expensive, biomass and solar costs are astronomical. Most electricity can be profitably brought to market today for $0.12/kWh or less. Distributed solar generation will run closer to $0.28/kWh. Utility-scale solar is only slightly less. The difference between these two figures will be made up by subsidies by electricity customers and taxpayers.

Solar is already the most subsidized energy source at around $24/MWh. But both of these bills will require more subsidies to make these solar and biomass programs work—up to $220 million a year from residential consumers alone if SB 541 mandates 3,000 MWs. SB 545 is less expensive, but will still cost consumers millions of dollars annually.

Energy efficiency mandates are another source of current and future increased costs on electric bills. Several proposals have been floated this session that would cost electricity customers as much as $426 million per year.

It is difficult to determine the exact cost of the current legislation, SB 546. However, the annual direct cost to residential customers should be around $25 million, with millions more in the form of higher prices for goods and services because of higher electricity prices to commercial and industrial customers.

Besides making it more expensive to air condition our homes, the legislature is prepared to increase the cost of driving our cars. SB 855 and SJR 52 would index the state’s gasoline tax to construction inflation and allow local governments to impose a new local gasoline tax. Over the next decade, Texas motorists could go from paying 20 cents per gallon to 45 cents, for a total cost of $21 billion.

Despite the billions in increased energy costs imposed by these bills, don’t expect our state’s Legislative Budget Board to give Texas consumers much warning. The fiscal notes accompanying these bills use terms like “indeterminate,” “cannot be determined,” and “no significant fiscal implication to the state is anticipated.”

Governments – whether local, state, or federal – are rarely interested in the fiscal impact of legislation on their citizens. As long as “no significant fiscal implication to the state is anticipated,” these proposals breeze right along.

Next time gasoline prices jump, or electricity rates are going through the roof, or we find ourselves paying more for less car, we could do what everyone else does and blame the market. But whatever we do, we shouldn’t ask questions. After all, what we don’t know won’t hurt us.

Originally published by the Texas Public Policy Foundation at www.texaspolicy.com